HSINCHU, Taiwan (Reuters) - Taiwan Semiconductor Manufacturing Co Ltd (TSMC) (2330.TW) could quickly fill any order gap should U.S. restrictions against Huawei Technologies Co Ltd [HWT.UL] prevent sales to the Chinese firm, the company’s chairman said on Tuesday.
TSMC’s clients include Huawei’s chip division HiSilicon. However, the U.S. blacklisting of Huawei over security concerns and trade disputes with China has left the world’s biggest contract chipmaker exposed to diplomatic developments between two countries where it also has production bases.
The company last month unveiled plans for a $12 billion plant in the United States just hours before the U.S. Commerce Department outlined a proposal to amend chip export rules - a move that would restrict TSMC’s sales to Huawei.
The amendment would require licences for sales of semiconductors made abroad with U.S. technology to Huawei, the world’s biggest supplier of telecommunications equipment and second-largest smartphone maker.
Asked at an annual general meeting whether TSMC could fill the order gap left by HiSilicon if the amendment is adopted, TSMC Chairman Mark Liu said, “We hope that won’t happen”.
“It’s difficult for me to predict how fast it could be filled immediately.”
Liu said TSMC is watching how the rules are implemented and is “still studying” what they mean for the company. He said TSMC does not rule out the possibility of applying for an exemption.
Analysts estimate TSMC generates around 60% of revenue from the United States and 20% from China.
TSMC is not the only company impacted by Sino-U.S. tension, Liu said.
“Please be reassured. We will find a solution,” he said, answering a shareholder question on concerns about any impact on TSMC. “We will overcome the challenges one by one.”
TSMC’s U.S. investment plan is “definitely in line with” the company’s interests, and will help the firm gain the trust of clients and boost its talent pool, Liu said.
TSMC is still in talks with the U.S. government about subsidies for its new plant to make up for cost differences between Taiwan and the United States, and while the plant will not have direct dealings with the military, some clients might be military suppliers, he said.
Liu was upbeat on overall tech demand, even as the coronavirus outbreak has ravaged the global economy.
“Everyone can see that iPhone sales are still pretty good.”
Reporting by Yimou Lee; Writing by Ben Blanchard; Editing by Muralikumar Anantharaman and Christopher Cushing